Oil prices have fallen again, with the U.S. benchmark price dropping to its lowest level since December 2003.
The main reason for the drop this time around was the 14% slump on China's markets this year, which is being driven by concerns over growth that could ultimately hit oil demand. The stronger dollar also makes oil more expensive in overseas territories.
Reuters notes that another key factor was leaked data suggesting Iraq's oil output from its southern territories has increased 8 per cent and that total exports could reach a record 3.6 million barrels a day in February. The country is now the second-largest producer in the powerful OPEC cartel, adding to concerns the bloc will not make cuts to support higher prices.
U.S. production has fallen in recent months, but the decline has been slower than many investors had expected. U.S. companies have cut costs and become more efficient, and some decreases in shale-oil production have been offset by increasing offshore Gulf of Mexico output. The U.S. Energy Information Administration said Monday that it expects production from the seven major shale-producing regions to fall by 116,000 barrels a day, or 2.3%, in February from January, which would be the biggest monthly decline since January 2015.
The Wall Street Journal, "Oil skids to 12 year low" January 11th 2016
The Week, "Oil price - predictions of fall to $16 - and even $10." January 12th 2016
Reuters, "Oil slips towards $30, traders bet on more falls" January 12th 2016